Should you consider debt consolidation in 2016?

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Improving the state of finances is an important goal for many Aussies. According to a January 19 release by Finder.com.au, New Year resolutions relating to money was the second most common behind those that focused on health and fitness.

With this in mind, it could be time to see if there is a better way to handle your debt. These days, there are a huge number of things that you can take out finance for. Apart from credit and store cards, these can range from things like homes to cars and holidays.

However, taking on so many different types of debt can make it tough to keep track of and manage. Furthermore, it’ll make budgeting that much trickier with so many repayments to keep tabs on.

If managing all your debts across all these different lenders is feeling like a juggling act, consolidating your debt with Border Bank may be something worth looking at.

What is debt consolidation?

In basic terms, debt consolidation is when you take out a loan to pay off all your other debts, meaning you pay off one lender instead of numerous.

What are the benefits?

There are numerous advantages to debt consolidation.

  • It’ll make your finances easier to manage. By combining all your debt into one, it’ll make it far simpler to keep track of, especially when you only have to answer to one financial institution.
  • You could end up making a saving if the interest rate is lower on your new loan. For instance, these types of financing options will often have a more favourable interest rate than a credit card loan. Check with Border Bank to see if we can negotiate something that’ll help you achieve this outcome.
  • Debt consolidation loans can usually be spread over a longer period of time than others, making repayments easier to tackle.

What are the risks?

Consolidating your debt isn’t the solution for every situation. Here are a few tips to consider before entering into a new loan:

  • Take into account the interest if taking out a longer repayment term.
  • Always calculate any extra fees and charges to ensure that you’re not paying more overall.
  • Be sure to factor in any fees from repaying off other loans early.
  • If you get tempted by easily accessible credit, this might just lead you to begin borrowing more after your debts are cleared.

While there are many benefits to consolidating your debt, it’s obviously important to ensure it’s the right decision. Speak to the lending professional at Border Bank , and we’ll help you see if we can make this setup work for you.